DIRECT TAXATION

Auckland Star, Volume LIII, Issue 246, 17 October 1922, Page 4

DIRECT TAXATION

Till' i|ticstiiin <if direct taxation was upaiii ileliatPfi in t'arliamcnt yesterday.

anil with suine fiiinkncss. In moviuj; tluit in no case sliuuld taxatifn 'in companie» exceed five in the pound, u'liii-li was the recommendation of the Taxation Committee. Mr. Mitchell knew lie could not succeed; lie <lid it tn draw

attention to tlie need for readjustment of taxation. Both the Prime Minister and the Leader of the Opposition admitted the need for this. Mr. Massey said "the whole Land and Income Tax Act required overhauling, but it could not be done at once," and Mr. Wilford believed that "a thorough readjustment of company taxation" must come. The Government's trouble ia that owing to its extravagance and its tardy reform— superimposed, of course, on the war — it is difficult to bring down comrpany taxation to live shillings all at once, or to alter immediately the incidence of tho impost by making the shareholder and not the company the chief target of th* Government. Taxation will ultimately have to come down to five shillings and below it, and we believe that tlie incidence will also have to be modified if not radically altered. The ptvsent method is rough and ready. Companies able to paes on the tax to the consumer prosper; those who cannot, suffer. Shareholders are taxed through this tax on the company, irrespective of the size of th<"ir holdings and the amount of their dividend incomes. The investor of small means may lose his dividends, while the wealthy shareholder in prosperous companies escapes taxation on his largv; income. Moreover, there is no reason why taxation of the company •should l>e entirely abandoned if a system of taxing profits through the shareholder is adopted. A flat rate on profits might be justified, and there would still be the undivided profits to tax after the Australian system. The New Zealand method should be altered so as to embody the b«et features of the English and Australian systems, from which it now differs radically.